Top Ten Union Corruption Stories of the Year

On one level, 2017 was a very good year. President Trump, a man who works with unions rather than for them, took office in January. He named Marvin Kaplan and William Emanuel (each approved by the Senate) to fill National Labor Relations Board vacancies, and Peter Robb, another ally of individual worker liberty, as NLRB general counsel. This contrasted with former President Obama’s picks, which created a natural 3-2 pro-union board majority. The reconstituted board already has made a difference. Last month, in PCC Structurals Inc., the board raised the bar for “micro-union” organizing, overturning the misguided Specialty Healthcare decision of 2011. At the state level, Kentucky and Missouri early in the year passed Right to Work legislation (each signed by the respective governors) to protect private-sector nonunion workers from having to pay union dues to keep their jobs.

Crucial as such countervailing forces to union power were, unions proved themselves capable of using, or at least rationalizing, acts of intimidation to maintain advantage. The most blatant example was set by Teamsters Local 25. Lawyers for four members of the Boston-area local accused of terrorizing a nonunion production crew of the Bravo network reality TV show Top Chef back in June 2014 managed to convince a federal jury last year that their clients were innocent despite overwhelming evidence of guilt. A fifth man, ringleader Mark Harrington, at least, had pleaded guilty earlier. Prosecutors also had their hands busy with a violent New York City-area shakedown crew run by Roland Bedwell, business manager for United Plant and Production Workers Local 175, who last August pleaded guilty to threatening a paving contractor. Rep. Steve King, R-Iowa, wants to discourage such behavior. In November, he introduced the Freedom from Union Violence Act, which would place unions under the jurisdiction of Hobbs Act racketeering statutes. With Donald Trump in the White House and Republicans holding majorities in both houses of Congress, passage of this overdue legislation, first introduced a little over 20 years ago, looks like a possibility.

Scams were abundant. As with the previous year, the largest of them consisted of third-party fraud committed against union health plans. In New Jersey, a former president of a United Auto Workers local and an insurance industry executive were charged in federal court in January with conspiring to recruit “straw” participants for Blue Cross/Blue Shield benefits. The estimated total loss to insurance companies was $6.6 million. In suburban Chicago, three family members, including a chiropractor, received sentences for their roles in a six-year scam that triggered nearly $11 million in insurer losses. The Mafia once again showed they are well and alive. In May, FBI agents and NYPD cops busted 19 members and associates of the Lucchese crime family for a wide range of crimes dating back 17 years. Two arrestees, each a top figure in the syndicate, had controlled a number of New York City-area construction unions prior to the beginning of that period. There also was the inevitable parade of union officials and office employees stealing from the cookie jar. Indeed, cases of theft in amounts of at least $250,000 were as much in abundance as in any year in recent memory.

The following list, derived by subjective criteria and ranked in reverse order of impact, provides an overview of the organized labor stories in 2017 that mattered most.

10) Longshoremen business agent in Virginia sentenced for embezzling over $1 million. For a decade, Robert Smith III used International Longshoremen’s Association Local 970 as a personal ATM cash machine. Last February, Smith, union business agent and financial secretary, was sentenced to 41 months in prison for siphoning more than $1 million in funds from the Virginia Tidewater region union to his own use after pleading guilty in October 2016. About $700,000 of this sum represented cash machine withdrawals.

9) Pittsburgh Boilermakers business manager pleads guilty to embezzlement, tax evasion. The International Brotherhood of Boilermakers is a highly profligate union, something that a Kansas City Star investigation once again discovered. But even gross excess at headquarters hasn’t necessarily been virtually synonymous with theft. At Boilermakers Local 154 in Pittsburgh, it was. Former business manager Ray Ventrone pleaded guilty in federal court in September to one count of routing $1.5 million in union funds toward his own personal use and one count of tax evasion in the sum of more than $265,000.

8) New York City-area labor chieftain pleads guilty to shaking down contractor. For years, the Long Island-based United Plant and Production Workers Local 175, an affiliate of the International Union of Journeymen and Allied Trades, operated as a shakedown crew from hell. Crew leader Roland Bedwell, previously kicked out of the Laborers for bad behavior, rarely wasted an opportunity to assault, vandalize property, block traffic or terrorize nonunion contractors and employees, or members of rival unions, in order to reach labor “agreements.” The reign of terror ended with a federal investigation; Bedwell last August pleaded guilty to extortion against a paving contractor last August. The actual litany of crimes was a lot longer. Hopefully, his band of 15 enforcers, whom Bedwell proudly had described as “animals,” will have their date with justice as well.

7) UAW, Chrysler officials rip off millions from training program. It was a lucrative scam while it lasted for former Fiat Chrysler Vice President Al Iacobelli, late United Auto Workers Vice President General Holifield, and Holifield’s wife, Monica Morgan. Iacobelli wrote checks from a Chrysler-funded joint company-union training center account to a nonprofit controlled by Holifield, who in turn funneled the funds to a pair of businesses controlled by his wife, who in turn used about $1.2 million to prop up the businesses and finance shopping sprees. That didn’t even include what Iacobelli stole. A joint probe by the FBI, IRS and the Labor Department put an end to this scheme. Two other persons, ex-Chrysler financial analyst Jerome Durden and UAW negotiator Virdell King, have pleaded guilty so far. Expect Iacobelli and Morgan to do likewise soon.

6) Congress reintroduces bill to curb union violence; Boston Teamster thugs show why such legislation is needed. Rep. Steve King, R-Iowa, sponsored legislation this past November that would make it easier to prosecute union leaders and members for acts and threats of violence by amending the Hobbs Act, a piece of 1946 legislation designed to punish racketeering that inhibits interstate commerce. A misguided Supreme Court in 1973, U.S. v. Enmons, effectively has exempted unions from the law’s coverage. The need for the bill was underscored last year when four members of Teamsters Local 25 were found not guilty by a federal jury in the face of clear evidence that they had terrorized a nonunion production crew attempting to set up for a segment of the Bravo reality TV show, Top Chef, at a suburban Boston restaurant. Attorneys for the defendants, on fact, had invoked Enmons to make their case. It’s up to Congress to remove this basis for a defense.

5) NYC-Area trucking contractors sentenced for cheating Teamster members out of $5 million in benefits. The practice of ‘double-breasting,’ in which a unionized contractor sets up a parallel nonunion company identical all but in name in order to shortchange certain employees out of wages and benefits, is a fact of life, especially in non-Right to Work states. Early last year, two trucking firm front persons, Nicholas Farnsworth and Toni Thomson, were sentenced in Brooklyn federal court for their roles in defrauding benefits plans of Teamsters Local 282 out of around $5 million in scheduled benefits required under a collective bargaining agreement. Double-breasting is illegal for a reason: People who pay union dues are entitled to receive union benefits.

4) UAW president in New Jersey, insurance executive charged in $6.6 million union health plan scheme.Sergio Acosta and Lawrence Ackerman, respectively, president of a United Auto Workers local in New Jersey and an executive of various insurance companies, organized an elaborate scheme to recruit hundreds of persons across the U.S. to “enroll” in a union-sponsored health plan. Two of the companies were shell companies whose only purpose was to launder Blue Cross Blue Shield payouts for fake claims. A large-scale probe by the Department of labor put an end to this scam. The case is yet another reminder why benefit fraud is now the largest corruption problem in American organized labor.

3) Chicago-area chiropractor, others sentenced for massive health plan insurance theft, much of which affected union health plans. Vladimir Gordin Jr., Alexsander Gordin and Vladimir Gordin Sr., respectively, a chiropractor clinic operator, his brother and his father, were sentenced for their roles in a six-year scheme that generated about $29 million in phony billings and $10.8 million in false claims the costs of which were borne by insurance carriers. The Gordins, aided by two (convicted) clinic employees, billed insurers for nonexistent or unnecessary medical services and then created fake records to cover their tracks. Trustees and managers of union benefit plans might want to conduct more thorough due diligence in choosing clients.

2) Marvin Kaplan and William Emanuel join NLRB, promote worker liberty. The National Labor Relations Board, due to a number of Obama-era appointments, had been a 3-2 majority advocate for unions. A recent U.S. Chamber of Commerce monograph, Trouble with the Truth, underscored how thoroughly the board’s mission had been radicalized. President Trump threw a wrench into this juggernaut by naming Marvin Kaplan and William Emanuel to fill two vacancies, and Peter Robb to become board general counsel. The board’s role is shifting back to one of nonpartisan arbiter. The NLRB made a sensible impact on December 15, in PCC Structurals Inc., reestablishing the traditional test for defining a bargaining unit within a given place of employment.

1) Mark Janus challenges public-sector union authority to coerce worker dues payments; gets Supreme Court hearing.Mark Janus is a Chicago-area nonunion civil servant forced by an AFSCME local into the choice of paying union dues or losing his job. Not liking that choice, he decided to sue. Now the U.S. Supreme Court, deadlocked two years ago in the related Friedrichs case, is about to hear oral arguments. A ruling in favor of plaintiff Janus would be a defining moment in the history of American workplace relations, effectively reversing over 40 years of legal justification for the state and local government employee union shop.

(Dis)honorable Mention: Chicago Teamsters boss John Coli resigns from union, and eventually is indicted, following revelations that he extorted payoffs from a local film company; probe by former federal prosecutor Joseph DiGenova gives Teamsters international leadership a clean bill of health, but issues remain; cops bust 19 Lucchese crime family members and associates, including Steven Crea and Joseph DiNapoli, two key figures in Nineties-era New York City-area construction union rackets; Southern California Longshore and Warehouse union member David Gomez sentenced for defrauding union health plan out of $250,000, a scam that may have totaled $3 million; Matt Smith, Transport Workers secretary treasurer in Dallas-Ft. Worth area, pleads guilty to embezzling $400,000 from union; the president of a Mississippi local of the Communications Workers of America, Danny Woodcock, indicted for embezzling more than $300,000; Danae Romero, officer of Southern California-based independent union, pleads guilty to role in $900,000 family-affair ripoff; Ryan Jones, secretary-treasurer of Machinists local in Maine, pleads guilty to embezzling $280,000; Laborers international union puts corrupt Southern Illinois local under trusteeship; John Matassa, Chicago-area independent union boss and mob made man, indicted for Social Security fraud; Lodi, California Fire Fighters Treasurer Oscar Picazo charged with stealing nearly $300,000; John Hamilton, Operating Engineers business manager in Detroit, pleads guilty to extortion, fraud related to pension steering; Jeni May Hughes, office manager for Plumbers local in Little Rock, pleads guilty to embezzling over $400,000; Francis Mazzella, contractor for Painters union in Queens, N.Y., sentenced for $400,000-plus benefit fraud; Providence Plasterers & Cement Masons business manager-financial secretary Richard D’Antuono pleads guilty to embezzling $250,000 to $550,000; International Longshoremen’s Association foreman in New Jersey, Paul Moe, indicted, convicted for $500,000 ghost worker scam; Michigan Electrical Workers office manager Stephanie DeBoer pleads guilty to stealing over $300,000; Glenn Robert Smith, ex-comptroller of Michigan Carpenters regional council, pleads guilty to $500,000 embezzlement; Service Employees puts corrupt Michigan health care affiliate under trusteeship; Cleveland Steelworkers boss David Sager indicted for embezzlement and graft totaling more than $400,000, and pleads guilty to tax evasion and obstruction of justice.